Aug 4, 2009

The Problem with Cash-for-Clunkers [LINK]

It's amusing how the media generally assumes the popularity of the cash-for-clunkers program means it would have been a good thing had only the program been well administered. An economist might see that popularity as a sign of inefficiency: a subsidy to manufacture unnecessary new cars, whose environmental impacts may exceed the marginal amount of pollution generated by the clunker. It gets more absurd the more optimism you apply to future trends. We keep hearing we're on the verge of all sorts of unprecedented boosts in automotive efficiency. If that were the case, keeping all those clunkers on the road for as long as possible, and not retiring them artificially early, would maximize the environmental benefit when it inevitably comes time to switch to a new vehicle.

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